Tom mentions that he'd be in favour of more local taxation. That's "more local" rather than "more" local of course. And I agree but we don't in fact need to try and devise such a system. We can just copy one that works very well elsewhere.
Let's have a national income tax rate of 3.76%. OK, if you really insist we'll have a top national income tax rate of 15% as well. That's plenty to pay for the things that the national government really does have to do, defence, the higher courts systems and so on. Everything else we'll raise the money for and pay for at the lowest political level possible. In the UK this is the council ward which is some 5,000 to 30,000 people, depending upon urban, rural and so on. This maps well over the 10,000 and up number in the communes of the country we're going to nick our tax system from.
The local tax rate is set and raised locally (although of course you can have a national organisation collecting it if you wish) and much more importantly, it is spent locally. Each such ward will indeed need some police cover, fire cover and so on and there's no problem with banding together as larger units to pay for these. Similarly with health care, some such is decidedly local but not every ward needs a transplant ward, so money can be sent upwards to pay for a share of one of those if desired. But the massively important point is that money is only sent upwards, local things are locally funded, regionally can be regionally but only with the direct consent of that lowest level.
Such a system will also be subject to what I've called Bjorn's Beer Effect here before. If Bjorn is the bloke who sets your tax rate and Bjorn is the guy who decides where the money is spent, then in a community of 6,000 to 30,000 people you're going to know, or at least be able to find out, where Bjorn has his Friday night snifter. Which is going to put the fear of God into Bjorn as he spends your money: but also means that there's one human individual to explain to you, forcefully if need be, why you can't have what you're not willing to pay the taxes for.
The country we're taking this from is of course Denmark. Which means we can all join in a rousing chorus of, along with Polly Toynbee and all points left, "We must all be more like the Nordics!"